Tesla Acquires NUMMI; Toyota Buys Tesla Stake

By Chris Haak

Just weeks after Toyota shut down production, presumably for good, at its NUMMI facility in Fremont, California, there’s a sign of life at the former GM-Toyota joint-venture factory.  Electric vehicle maker Tesla has will acquire the empty factory and intends to employ 1,000 individuals there making an as-yet unspecified electric car.

Simultaneously, Toyota will invest $50 million in the EV startup, in exchange for that value in common stock when Tesla completes its planned initial public offering.  So, to recap, Toyota is investing in Tesla (which Daimler did almost a year ago to the day as well, and for the same $50 billion figure), while Tesla is buying Toyota’s old assembly plant.

The NUMMI plant, which most recently built the Toyota Tundra, Toyota Corolla, and Pontiac Vibe, is enormous.  Even at the volumes at which NUMMI used to produce Toyotas and Pontiacs, only a fraction of the giant plant – which spans 88 football fields – was utilized.  With Tesla expecting that production volumes will be a fraction of the plant’s former output, the company, in the words of CEO Elon Musk, will “be occupying a little corner.”

The state of California is chipping in as well, by providing some $20 million in sales-tax abatements that will go toward capital expenditures and the re-tooling of the NUMMI plan.  Elon Musk predicted that his company would have to spend amounts in the “hundreds of millions of dollars” to get it ready for Tesla’s series production.

From this partnership, Tesla should gain access to Toyota’s massive purchasing power, supplier base, and engineering resources.  Toyota is expected to get access to Tesla’s lean (and rapid) product development and its EV technology.  Tesla’s Roadster has been using newer-technology lithium-ion batteries, while Toyota’s hybrids use the older nickel-metal-hydride batteries.  Lithium ion batteries have packaging and energy density advantages over the older technology.

Tesla has big ambitions, and its development has been aided by a $465 million Department of Energy low-interest loan.  Roadster production is still going very slow, but the company hopes to sell tens of thousands of its forthcoming Model S sedan annually at around $40,000 each, then sell hundreds of thousands of less-expensive EVs in the longer term.  With 88 football fields of space to work with, it would seem that the company has plenty of room at NUMMI to grow as big as it’s able.

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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